Wednesday, November 19, 2008

Have we lost our minds?

OK, I may have a better idea than a wholesale move to socialism...why would we possibly want to provide federal funding to the "Big Three" when they are poorly run companies? You want to beat AIG knuckleheads up for $400,000 parties after they get billions in federal funds? Why don't you take a look at the US automobile industries financials? SHEESH! ARRGHH! Maybe I am the only one who is distressed about us bankrupting our children and grandchildren, becauses it certainly doesn't look like the US Congress and incoming Administration gives a &%!@ about them!....

...the reality of the auto industry is that over the past twenty years or so Detroit made contractual concessions to the UAW which slowed hourly wages in return for benefit concessions...well, slowing is relative when we are speaking about hourly wages in the range of $65-$75 per hour for line workers....and guaranteed pension and health benefits for auto workers and retirees...which have fundamentally destroyed the companies...

...and so now we have GM trading below $3...and running out of cash...and holding out their hand to the Feds/each of us....to cover these outrageous management decisions....the reality is that now the US auto industry are health care and retirement companies (seriously here!) that happen to make cars...plain and simple...and if you think that a cash infusion is going to save them we are kidding ourselves...because they will be back for more in 2009...don't believe me?...two words to remember....British Leyland....check out this link http://www.nytimes.com/2008/11/18/business/economy/18car.html from Tuesday's NY Times...for a sobering view of what happens in government bailouts for auto makers who fail to fundamentally address the underlying economic problems....and try to cover over it with dire warnings of a loss of jobs....did I mention this story is from the New York Times?...I found that very interesting....

...So my great idea is if we are going to bail out every industry (with political power, that is)...why don't we simply pay off every mortgage in the US...which will immediately restore the housing market....build wealth...restore confidence....and then we would likely go refinance our homes, take the money, by hot-tubs, jewelry and take a vacation to relieve the stress of the past months and the hit to our 401(k)'s....and begin the cycle again....